Dividends and Stocks

If there’s one thing that most blue-chip stocks have in common, it’s that they pay dividends. In fact, if a company pays a dividend, it’s generally a good sign because it often means its profits are such that it can afford to do so.

Dividends represent a distribution of corporate earnings to company shareholders and usually take place in one of two forms – cash or stock. Each company’s board of directors determines the actual dividend amount that the firm will pay out. Most cash dividends are paid on a quarterly basis. However, stock dividends are generally paid at infrequent intervals.

The types of companies that offer dividends vary. Some are large- and mid-cap firms that have long histories of steady dividend payments and competitive yields. They are the kind of buy-and-hold shares that can be used for current income and to multiply your wealth over time. Others are smaller, off-the-radar companies that sport faster growth and the chance for bigger capital gains. However, they also buck the trend by sending out regular dividend checks, too.

To learn more about specific dividend stocks you should add to your portfolio, click below.